Final Business Models

2 | Business models in the visual arts
Turning Point Network
Contents
Executive summary
Introduction
What is a sustainable visual arts business model?

What is a business model?
Why and when does having a good business model matter?
What do we mean by sustainable?
A strong business model for the publicly funded visual arts
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8
12
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How good are the current models?

Some systemic challenges
A multiplicity of business models
Fixed assets
Knowledge assets
Focus of engagement
Start-ups/project funded and Service, Umbrella and Networking (SUN)
organisations
Snapshot 2008/2009
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How can visual arts organisations develop better business models?

Audience focus
Business skills development
Smarter support operations
Financial and funding strategies
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35
Concluding thoughts
Suggestions for further action
38
38
Appendix A: bibliography
Works cited
Works I found helpful
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42
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Appendix B: contributors
44
Appendix C: organisations reviewed
46
Appendix D: interesting and blogs
47
Appendix E: The performing arts paradigm
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Executive summary
This report was commissioned by Arts Council England and the Turning Point Network to
assist members of the network in reviewing and strengthening their own business models.
Its focus is thus on organisations and not individuals. It is predicated on the belief that sound
business models are a necessary component in a healthy visual arts ecology and essential for
most publicly funded organisations.
Inevitably, the primary focus of this report is on what could and needs to change rather than
what is working well.
There is a widespread belief that many business models within the visual arts sector are
relatively weak and particularly vulnerable to reductions in funding. This belief is broadly
supported by the available research. Most visual arts organisations are under-capitalised
and have reserves that are too small both to support investment and growth and to protect
the organisation in times of crisis. Organisational assets (staff, buildings, brand and IP
[intellectual property]) are not always fully exploited. The absence of substantial ticketed
income means that increased activity almost always converts into increased costs and visitors
remain a relatively unexploited source of further income.
In comparison with performing arts organisations, the business models of building-based
organisations are often inflexible. Many organisations have not been able to set aside
the necessary funds for repairs and renewals of new lottery-funded buildings. Fundraising
remains challenging for all but a few of the larger, London-based organisations.
Within visual arts the sector there is only a limited understanding of what a business model is
and does; in part this reflects the generally low level of business skills within the sector. There
is, however, a good consensus around what a good business model should look like the
challenge appears to be translating that general agreement into concrete action.
The key obstacles to building better models appear to centre on
aspects of the culture of the visual arts world
the practical implications of free entry
funder tolerance of underperformance
The culture of the contemporary art world has a strong individualistic flavour and a traditional
ambivalence towards, if not rejection of, the values of the economic world. From a purely
business perspective this is problematic: business is a collective endeavour and it is hard to
be good at something that you do not value or possibly understand.
Free entry is a great blessing but does present business challenges. Customers do not
automatically translate into revenues, let alone contribution to overheads or surpluses,
so increased activity usually leads to higher costs. Income-generation efforts must focus
on challenge of exploiting secondary income opportunities, such as catering, retail and
individual giving. Programming can only easily affect costs not revenues. Without large ticket
incomes to manage, many organisations do not or cannot invest in staff with business skills.
For understandable reasons, funders find it difficult to tackle underperformance in funded
organisations and are generally slow to call time on failing organisations. This often mutes
or removes completely the sense of urgency that is necessary to get difficult change started.
This report offers several recommendations for change for individual organisations, funders
and the network designed to strengthen the business models of network members (see
Concluding thoughts).
In summary I would suggest the following.
Visual arts organisations need to consider and debate the impact of their discomfort with
business and the economy upon their own sustainability.
Funding bodies need to become less tolerant of underperformance and more willing to
challenge failing organisations.
The development of business skills should be a priority for organisations and funders.
Greater efforts need to be made to value, invest in and exploit organisational assets
(people, buildings, brand and intellectual property).
Organisations need to get much closer to their audiences, with a view to attracting more
resources via secondary spend, individual giving, advocacy and volunteering.
Businesses in the sector need to rethink their support operations to cut costs and/or secure
better services, that is, to improve their productivity. This could include:
shared services, joint procurement and outsourcing
using digital technologies to automate business processes
making greater use of volunteers in an appropriate and strategic manner
The visual arts are a vibrant, creative and exciting sector that has grown substantially in recent
years. The challenge for the sector is to focus its energy and creativity into building better
businesses as well as delivering great art for everyone.
Introduction
This report was commissioned in direct response to a request from the Turning Point Network
for support and assistance in the challenges of developing and maintaining sustainable
business models within the visual arts sector. It was commissioned before the current
government came to power and the current round of public funding cuts had begun.
Those cuts have lent a certain piquancy to the issues debated here but have not, I believe,
changed the fundamental nature of the environment with which arts organisations will need
to grapple in the next decade.
Changing demographics (a growing, increasingly diverse, urbanised and ageing population),
the disruptive impact of new digital technologies, radical shifts in employment patterns and
the impending resumption of India and Chinas historic role as major economic world powers
are only some of the changes with which all organisations will need not only to cope with but
benefit from if they are to be successful.
This report is the first stage of a two-stage project, whose brief is to
To develop research materials and events that will explore what sustainable business models
look like in the visual arts.
The project will deliver Turning Point recommendations on improving the sustainability of the
visual arts sector in the long term. The case studies, research recommendations and events
provide guidance to visual arts organisations on how to become more robust in the face of
recessions and changes to public sector spending.
It will directly address Goal 5 in the emergent National Arts Strategy being developed by Arts
Council England: the arts sector is sustainable, resilient and innovative.
The purpose of the report is to inform and engage; while being evidence-based it will be
relatively informal, short and visually attractive.
The report addresses three key questions:

What should a sustainable business model look like in the context of the publicly funded
visual arts sector in England?
How could visual arts organisations develop better business models?
It addresses these questions from the perspective of strategy, rather than vision. There is
a tendency within the arts sector to focus most energy on vision/policy and operational
delivery, while skipping over the need for a clear strategy to link the two. Strategy is difficult
it involves making hard choices and often sacrificing something in the now for something
two years hence, but it is at the core of building successful business models.
This work draws on a number of sources:
conversations with leaders, managers and consultants within the visual arts and wider
arts sectors (see Appendix B: contributors)
publicly available information on visual arts organisations, such as websites, Charity
Commission (see Appendix C: organisations reviewed)
annual return and Sustain application information made available to the author by
Arts Council England
published works on business, the creative industries and arts policy (see Appendix A:
bibliography)
blogs on the arts, public and arts policy and creativity (see Appendix D: interesting
and blogs)
my own experiences within the sector as a finance and change consultant including
work on the Arts Councils Stabilisation, Recovery, Sustain and Thrive programmes
This report could not have been written without the support and generosity of all of those
who gave freely of their time and ideas; I would like to record my thanks for their input as
well as stating that the opinions given here, and any mistakes, are entirely my own.
I would really welcome feedback on the ideas set out in this report. You can contact me via
my blog on the Turning Point site (http://turningpointnetwork.squarespace.com/journal/)
or by email (susanjroyce@gmail.com).
This work is licensed under a creative commons licence.
What is a sustainable visual arts business model?
This section seeks to establish a working definition and to offer a model that grounds this
definition in reality.
What is a business model?
A great deal has been written about business models in the commercial world, a little about
not-for-profits and very little about business models in the publicly funded art world (see
Appendix A: bibliography). This section seeks to take the best of this thinking and apply it
to the very particular circumstances of most of Turning Point members, namely a not-forprofit, publicly funded organisation working in the visual arts sector.
First, a business model is much more than the financial transactions undertaken by an
organisation and recorded in its management accounts and financial statements. It describes
the rationale of how an organisation creates, delivers and captures value, Business Model
Generation (Osterwalder and Pigneur, 2010, p14).
Two leading business academics, Kaplan and Norton, identified four key perspectives from
which a business needs to consider its operating model and performance:
learning and growth
internal business processes
the customer
the financial
They reworked their model for the not-for-profit and public sectors, as illustrated below.
THE MISSION
FIDUCIARY PERSPECTIVE
If we succeed, how will we
look to our taxpayers and
funders?
CUSTOMER PERSPECTIVE
To achieve our vision, how
must we look to our
customers?
INTERNAL PERSPECTIVE
To satisfy our customers and financial
donors which business processes must
we excel at?
LEARNING & GROWTH

To achieve our vision, how must our
organisation learn and improve?
Figure 1, Strategy map, Strategy Maps (Kaplan and Norton, 2004)
The mission is paramount it should shape how the whole organisation works because the
organisation exists to deliver the mission.
To the understanding that a business model is a model of the whole organisation its culture,
organisational structure, offering to customers (the customer value proposition), relationship
with suppliers, systems and processes we need to add an appreciation of the impact of
being a not-for-profit organisation. As Jim Collins writes:
The confusion between inputs and outputs stems from one of the primary differences
between business and the social sectors. In business, money is both an input (a resource
for achieving greatness) and an output (a measure of greatness). In the social sectors, money
is only an input, and not a measure of greatness.
Collins
Good to Great and the Social Sectors (Collins, 2006, p5)
For members of the Turning Point group, the non-financial resources and intangible assets
they use in their work are at least as important as the cash passing through the accounting
systems. These could include
volunteers, such as interns and board members, whose contribution is unpaid but vital
personal and corporate networks, which the organisation and its staff use to generate
and source good ideas and find partners to collaborate with
the brands of both the organisation and its key players.
These are key business assets, requiring and rewarding good management in just the same
way as the cash assets recorded in the accounting systems.
Thus a business model in this sector is a description of how an organisation attracts and
deploys its resources to fulfil its mission. The following two models can help people within
organisations to think about how to do this well.
Key
Partners
Key
Activities
Customer
Relationships
Value
Propositions
Channels
Key
Resources
Cost
Structure
Revenue
Streams
Figure 2, Business Model Generation (Osterwalder and Pigneur, 2010)
Customer
Segments
The first model is the business model canvas,1 which is illustrated in summary form above.
This provides an excellent way of summarising an organisations business model on one,
albeit large, sheet of paper. At the core of the model are the value propositions that the
organisation offers its customers, to the left are the key elements which determine efficiency,
while those to the right concern value creation. These relationships and activities find their
financial expression in the organisations cost structure and revenue streams.
Secondly, the strategy tree ties links together mission, vision and values with strategy and
execution, as set out below allowing an organisation to project its model into the future.
Any planning exercise should start at the top of the tree and work down, with as much
iteration as necessary.
VISION
What change do we
seek in the world?
MISSION
How will we make this
change happen?
VALUES
What do we believe in?
STRATEGIC AIMS
What will be out primary
goals over the next 1-3 years?
ORGANISATION
How will we configure our
organisation to deliver our
mission?
DETAILED OBJECTIVES
Budgets, milestones and
project plans etc
Figure 3 Strategy tree
1 See http://www.businessmodelgeneration.com/
Why and when does having a good business model matter?

Great art can, and is, created by individuals and organisations with weak business models
and a strong business model is no guarantee of artistic excellence. However, robust models
are a prerequisite for
longevity
sustained audience engagement
successful stewardship of a publicly funded building.
Longevity is not, or should not be, an end in itself. But, if an organisations leaders wish to
see their ambitions realised beyond the short term, good business models are, at the very
least, of great assistance. They help organisations ride out the shocks of changes in the
external or internal environment and provide comfort and encouragement to potential
funders, supporters and partners.
Successful audience development requires a sustained commitment over a number of years,
which in turn, requires planning and degree of financial certainty regarding future investment.
Many, if not most, publicly funded buildings occupied by visual arts organisations have full
repairing leases (leases stating that the occupiers, not the landlord, are obliged to maintain
the interior and exterior of the building at their own cost). To maintain the building in an
acceptable condition and meet the lease obligations, organisations need to plan and set
aside funds to meet periodic and substantial costs. Occupiers can no longer assume that
public funds will be available to meet these costs.
You can make great work without great business models but you cannot keep doing it for
very long, especially if you occupy a good-sized building.
What do we mean by sustainable?
Business researchers are as fond of jargon as the contemporary art world, with buzzwords
coming and going like hemlines.
Until recently sustainability was popular shorthand for describing successful business models
that were capable of keeping their organisations in business beyond the short term. Growing
interest in evolutionary biology, and possibly the recent Darwin anniversary, has seen the
growing advocacy of resilience as the desirable trait. I have a problem with both expressions.
Sustainability is now strongly linked with issues of environmental impact; it is also stodgy
and pretty unexciting. The concept suggests that sustainability is a state to be achieved and
clung onto whereas, in truth, successful value creation happens at the interface between
the organisation and the outside world; success is fluid, fleeting and elusive. It is, to borrow
an expression from Peter Senge of Learning Organisation fame, a dance. Organisational
ambitions, culture and processes act with and in the external world to deliver value (or not).
Partly in response to a growing awareness of just how fast the world is changing, resilience
has become more fashionable; for example Mark Robinsons recent work Making adaptive
resilience real (Robinson, 2010). There are many definitions of resilience see Jackson (2010)
but one of the best and simplest comes from IBM.
Business resilience is the ability to rapidly adapt and respond to risks, as well as
opportunities, to maintain continuous business operations, be a more trusted partner,
and enable growth.
Source: http://www-935.ibm.com/services/us/bcrs/html/resilience.html
My concerns about resilience are both theoretical and practical. First, resilience comes from
systems theory and evolutionary biology and, as such, has much that is of value to say about
resilient systems and ecologies but rather less about how individual components/organisms
might function. Secondly, I think we are in danger of over-complicating the issues we face
by giving them sexy sounding names; at the risk of incurring the ire of business school
professors, good business modelling is not rocket science!
I believe that we need to focus on models that work and what makes them work we can
call them successful, strong, robust, sustainable or resilient what matters is that they deliver
on their core purpose. To do this an organisation must
design itself to deliver its mission and vision to a standard that is acceptable both to itself
and to those who invest in it (funders, visitors, donors and fellow artists and organisations)
be capable of innovating and investing in its own future development
have sufficient resources that it can survive a short-term shock without being immediately
plunged into an insolvency crisis.
A strong business model for the publicly funded visual arts
Interestingly, there is a broad consensus among those I spoke with and in the literature as to
the characteristics of a good arts business model. For example, the table below compares the
traits identified by Mark Robinson in his recent work and those identified in the Arts Councils
Thrive programme. These are compatible with the more detailed What success looks like
statements offered in the Arts Councils Self evaluation framework (see http://www.
artscouncil.org.uk/selfevaluation)
Making adaptive resilience real (2010)
Arts Council Organisational Development (OD)

Thrive
Resources
Culture of shared purpose and values rooted
in organisational memory
Predictable financial resources derived from
a robust business model
Strong networks (internal/external)
Intellectual, human and physical assets
A strong future vision which is clearly articulated

and through mission and values
Artistic excellence and the capacity to take
artistic risks
A commitment to learning and development
to enable the organisation to be flexible
and adaptable
Financial viability (including positive balance
sheets and a range of income streams)
Sound managerial systems and human
resource practices
Good leadership and clear governance
A sound knowledge of present and future
audiences, participants and customers
Strong networks and good relationships with
stakeholders, customers and suppliers
Adaptive skills
Leadership, management and governance
Adaptive capacity: innovation and
experimentation embedded in reflective practice
Situation awareness of environment and
performance
Management of key vulnerabilities: planning and
preparation for disruption
Table 1, Characteristics of strong arts businesses, Making adaptive resilience real (Robinson, 2010)
and The change works (Arts Council England, 2007)
Drawing on these and other authors, I would like to propose a simple model as a way of
thinking about the challenges of putting together the components of a potentially successful
business model for members of the Turning Point Network.
I believe that an organisation needs to exhibit three key characteristics to be successful
beyond the short term.
It must be attractive to a range of co-investors (funders, donors, customers/visitors,
staff, artists and other art organisations).
It must be agile: able to innovate and both to initiate and respond to change, in strategic
and thoughtful fashion.
It must be able to achieve its goals and to execute its strategy in cost-efficient and
effective ways.
It must also be well-led, well-managed and have a strong and appropriate organisational
culture, which aligns and supports its mission and values.
Each of these themes is developed further below.
The Triple A model
We confidently expected that in the first year wed get three million visitors and then it
would drop back to two million, which was the sort of number that one found at [Pariss]
Pompidou or at the Tate as it was. So to have five million in the first year, and then to see
it drop to four, and then build back to five, as it now is, is an astonishing record for Tate
Modern. It comes I think from the building, and it comes from the way in which the art
has been shown. And it has, as you say, become an institution that people regard as
very approachable.
Nick Serota, Director, Tate
Interview with Simon Schama (Financial Times, 30 April 2010)
Attractiveness matters because:
A portfolio of supporters willing to contribute money, time and reputation is essential
to mission delivery, both from a financial and a practical viewpoint. Resources are needed
to finance the costs of delivery and partners are needed to make projects happen.
A diverse range of co-investors reduces an organisations vulnerability to the reduction
or withdrawal of funding.
Visual arts organisations are people businesses they need to attract and retain good
people at both staff and board level but can rarely offer them substantial financial rewards.
Attractiveness is achieved by
a clear, compelling and attractive vision together with congruent and lived values
a strong brand
clear value propositions for funders, audiences and partners, including a willingness
to demonstrate impact
transparent, honest and appropriate communications, internally and externally
strong governance and leadership
According to DarwinsOrigin of Species,it is not the most intellectual of the species that
survives; it is not the strongest that survives; but the species that survives is the one that
is able best to adapt and adjust to the changing environment in which it finds itself.
Megginson paraphrasing Charles Darwin
Lessons from Europe for American Business (Megginson in Southwestern Social Science
Quarterly, 1963, p4)
Agility matters because:
The next decade is likely to see significantly greater changes in the UK cultural landscape than
the last one and some of those changes will not be welcomed by many cultural organisations.
Most network members are price takers not weather makers: they have a limited ability
to control the environments within which they operate. They must therefore have the
capacity to respond to change when it happens.
Agility and innovation are very closely linked; the ability to innovate, to find opportunity
in change and to invent new models of delivery is a key skill for all arts businesses.
Agility is built and sustained by:
a relentless future focus horizon-scanning and opportunity identification
effective and timely decision-making, delegated to the lowest possible level
a rejection of silo working
provision for investment in innovation and people development
flexible cost structures that minimise fixed costs
strong financial management and high-quality financial information
reserve levels that permit risktaking and facilitate investment
Ideas are easy. Its the execution of ideas that really separates the sheep from the goats.
Sue Grafton
Source: http://www.suegrafton.com/qanda.htm
Ability to achieve matters because:
Resources are scarce successful organisations are those which use the resources that they
have to greatest effect.
Being able to demonstrate value for money and impact is a source of competitive
advantage, particularly in times of increasing competition for funding (for example,
see Brookes, Kail, and Thomas, 2010; Heady, 2010 and Leighton and Wood, 2010).
Repeat business is highly dependent on getting delivery right the first time.
It builds confidence among all stakeholders including staff.
The ability to deliver comes from:

commitment to delivery from the top down
robust strategy, which has been clearly communicated throughout the organisation
people with appropriate skills
good project management processes
robust knowledge management systems
strong performance management
Good leadership and management are essential to the establishment and maintenance
of these traits. I like John Kotters definition of the difference between leadership and
management (Kotter,1996) see below.
Leadership is shared between board and senior staff, while management rests solely with the
staff team unless the organisation is very small and the board is very hands on.
Leadership is
Management is
Establishing direction
Aligning people
Motivating and inspiring
Produces change, often to a dramatic degree, and
has potential to produce extremely useful change
Planning and budgeting

Organising and staffing
Controlling and problem solving
Produces a degree of predictability and order and
has potential to produce consistently the shortterm results expected by stakeholders
Table 2, Leadership and management compared, Leading Change (Kotter, 1996)
Or put very simply

Management is doing things right; leadership is doing the right things.
Peter Drucker
The Practice of Management (Drucker, 1955)
The development of leadership and leaders within the sector has received considerable
attention and funding in the past decade, via organisations and initiatives such as the
Cultural Leadership Programme and the Clore Leadership Programme, but the development
of competent managers an easier but less sexy area has not. We have a sector full of very
creative, intelligent, enthusiastic, self-motivated and highly qualified individuals who, all too
often, do not have the skills they need to be efficient and effective.
Efficiency is doing things right; effectiveness is doing the right things.

Peter Drucker
The Effective Executive (Drucker, 2005)
Good leaders develop and nurture a strong and appropriate organisational culture. I am using
Edgar Scheins definition of organisational culture as:
A pattern of shared basic assumptions learned by a group as it solved its problems of external
adaptation and internal integration, which has worked well enough to be considered valid
and, therefore, is to be taught to new members as the correct way to perceive, think, and
feel in relation to those problems.
Organisational Culture and Leadership (Schein, 2010, p18)
We know what good business models would look like how do the current ones compare?
There is a widespread consensus that many business models within the publicly-funded visual
arts sector are relatively weak and particularly vulnerable to modest changes in funding.
This section considers why this might be the case and to what extent it is true from
three perspectives:
some of the business challenges inherent in the culture and modes of operation of
the sector generally
a consideration of the variety of business models within the sector and their challenges
a snapshot of the 2008/2009 Arts Council England annual return data
Some systemic challenges
This subsection addresses some systemic issues that present significant challenges to the
establishment and maintenance of strong business models within this sector.
The culture of the visual arts
There are two aspects of the culture of the visual arts sector as a whole which somewhat
operate against the establishment of successful businesses. I do not mean to suggest
that either trait is universal or dominant but both are present, pervasive and impact
on performance.
First, drawing on the paradigm of the solitary artist working in their studio, there is a strong
streak of individualism in the visual arts. This does not make for effective teamwork or for
a willingness to learn from others.
Strong teams are central to modern business practice but the principles are poorly understood
and not commonly implemented in visual arts organisations. Processes are designed from
scratch without considering whether others might have undertaken similar work before
and that their example can be learnt from. Knowledge management is poor, relying on
individual recollection and generosity instead of being embedded through culture and
process; re-inventing the wheel is a common pastime. These practices may well make for
rewarding jobs for individuals, and offer some compensation for low rates of pay and poor
career prospects, but they do represent a waste of resources in financial terms.
Secondly, there is a strong current within visual arts thinking, which Bourdieu christened the
disavowal of the economy.
The art business, a trade in things that have no price, belongs to the class of practices in
which the logic of the pre-capitalist economy lives on (as it does, in another sphere, in the
economy of exchanges between the generations). These practices, functioning as practical
negations, can only work by pretending not to be doing what they are doing.
Bourdieu
The production of belief: contribution to an economy of symbolic goods (Bordieu in Media
Culture Society, 1980, p261)
Put simply, it is hard to work at building a successful business model while denying that it is
what you are doing or that it has value as an activity.
Attitude towards failure
As a general rule, the arts funding system finds it hard to allow failing organisations to fail.
Concerns over losing the value of past public investment and political fallout, coupled with a
commendable desire to give a failing organisation every chance to turn itself around, combine
to produce a profound reluctance to walk away until every single avenue has been explored.
This reluctance produces, to borrow a phrase from the recent banking crisis, moral hazard.
Organisations are not incentivised to focus on sustainability in the good times or to take rapid
and appropriate action in the bad times, if they believe that the funding system will, in the
end, bail them out.
Free entry
Unlike other arts venues, most galleries and similar organisations do not charge for entry.
This creates a number of challenges for visual arts organisations.
First, in a financial sense, visual arts organisations are rather more like public sector bodies
(such as the NHS) than they are like other arts venues. As services are free at the point of
delivery their business models are missing a key component: substantial sales income related
to their core activity. It is very hard for such organisations to prevent increased delivery having
a negative financial impact as more activity translates into more costs with little additional
income to offset the rise in costs.
In addition, such models, especially when coupled with large overhead costs, are very
inflexible, with modest cuts in revenue having a disproportionate impact on the resources
available for the programme. In effect, the break even point for such organisations is
set very high. This was very apparent in a review of all 42 visual arts Sustain applications
received by Arts Council England. All but two claimed that declining income, in several cases
at quite modest levels, was endangering the delivery of significant elements of their planned
programme. (The two who did not cite falling income as a major issue were involved in major
capital projects that had encountered difficulties.)
Secondly, in the absence of a major commercial income stream to manage, there has been
relatively little incentive (and few resources) to develop in-house business and financial skills
at both strategic and operational levels. Many managers in charge of financial strategy and
control have little or no financial training. Financial reporting is sometimes basic at best.
Too few organisations prepare meaningful strategic or business plans. A review of the Sustain
applications revealed that only 12 organisations showed evidence of some understanding of
their own business model and of the impact that the banking crisis and resulting recession
had had upon their business.
Lastly, visual arts organisations have had little incentive or, in some cases, interest in collecting
good audience data and in developing relationships with their audiences. There are hopeful
signs that this is changing, for example the joint audience development project being
developed Turning Point SE and Audiences South. However, the absence of good customer
information is a serious obstacle to building better business models; a key component of most
sustainability strategies should be closer engagement with and commercial exploitation of at
least some audience segments.
A multiplicity of business models
There are multiple lenses through which it is helpful to consider business models within this
sector; three are offered here:
activity and investment models
the Henley Matrix
in comparison with the performing arts paradigm
There is also a consideration of start-ups and agencies as special cases with particular
challenges.
Activity and investment models

This insight comes from Mark Robinsons work in which he writes that:
This greater clarity about building or buying is much needed on all sides of the funding
equation if we are to use available money well. Does an organisation actively use its assets
to create new revenue to create fresh assets, for instance or does it do whatever activity
funding enables? (All talk of alternative business models seems to boil down to this binary
the rest is technical info and risk assessment.)
Making adaptive resilience real (Robinson, 2010, p7)
While not agreeing that this binary is the only lens I would use it is a useful one that I have
expanded on below.
Programme model
Investment model
Cash in => activity out. Focus on programme

delivery
Minimal investment in non-programme areas
Inherently vulnerable to changes in funder
resources and priorities
Work largely within an arts space talking
to other arts professionals
Change usually only possible at an incremental
level, for example, better fundraising
Relatively straightforward model to run
Majority of the portfolio
Co-investors (funders, audiences, artists and other

organisations) work with the organisation to
develop new assets (tangible and intangible)
Investment in people and innovation
Focus on ideas/artist development etc. as well
as programme delivery
Permeable working inside and outside the arts
Step or transformational change model game
changers
Really hard to make it work
Examples of organising pioneering this route:
Watershed, Bow Arts Trust, Wysing, BCA, folly
Table 3, Programme and investment models
Most organisations would fit into the programme model with relatively few seeking to pursue
the much more challenging route. A healthy ecology needs many programme-focused
organisations and a few game changers but the models of the programme-focused
organisations are likely to remain weaker than those who make it as game changers.
The Henley Matrix
Another useful way of placing organisations into a manageable framework is to use the
matrix devised by the Henley Centre for Arts Council England as part of its 21st-century
organisation programme (Curry and Gunn, 2005) that maps engagement (community =>
individual) against assets (knowledge => fixed). Clearly not all organisations fit neatly into the
quadrants but the model is a useful approximation of reality.
Community
engagement
Cultural
producer
Gallery
Fixed
assets
Knowledge
assets
Artist
studios
Development
agency
Individual
engagement
Figure 4, Henley Matrix, Towards thriving 21st century organisations (Curry and Gunn, 2005)
The following paragraphs address the benefits and challenges, from a business viewpoint,
which arise from being in each sector
Fixed assets
We are coming to the end of a period of remarkable public investment, via the National
Lottery, in the refurbishment and construction of arts venues. Since 2000, the Arts Council
alone has invested 104 million in visual arts buildings.
At a financial level, the decision to invest so heavily in bricks and mortar is rather counterintuitive. Within the commercial world, there is a growing acceptance that value creation in
the 21st century will come from the exploitation of intellectual property and that competitive
advantage will accrue to those who can best manage assets which others own (see Iansiti and
Levien, 2004).
A review of the 2008/2009 statutory accounts of 10 large, building-based visual arts
organisations revealed that only one organisation (Baltic) had set aside funds to meet
its expected future repair and refurbishment obligations. The problem appears to be
compounded by the (correct) practice of writing depreciation off against restricted fund
balances; no cash from unrestricted funds is therefore being saved to fund repairs and
renewals as would be the case in a commercial organisation.
Depreciation on restricted fund assets
Charities and commercial companies operate slightly different accounting rules. Profitseeking companies do not have restricted funds (trust funds given for specific purposes).
Assets are capitalised on the balance sheet and the asset value is reduced by an annual
depreciation charge that appears as an expense on the balance sheet. If all other things
are equal and the company achieves a break-even result or better, the company will amass
a cash balance equal to the depreciation charge, enabling future assets purchases as the
need arises.
Under the charity accounting rules (SORP) grants for capital projects are recorded as
income in the statement of financial activities, but the capital costs go straight to the
balance sheet, creating a large surplus in the years the grants are received. This, in turn,
creates a substantial restricted fund reserve on the balance sheet that matches the restricted
fund asset. Depreciation is charged annually against the asset.
Most arts organisations do not budget for restricted fund deprecation, understandably
seeing it as book entry which has no impact on their business and not being concerned at
the restricted funds losses which result. Unfortunately this means the business is not setting
aside cash for replacements.
Combined with the expected contraction in public funding, the ability of some organisations
to maintain and update their buildings is at best uncertain.
Knowledge assets
Knowledge assets (defined as the intellectual capital that an organisation owns or needs to
own to enable it to deliver its mission and create value) make for a potentially more flexible
business model than bricks and mortar. The challenge is to manage the asset effectively given
that the asset is to a great extent, inside your employees heads. An organisation working
in this area needs to be able invest substantially in the development of their staff and in the
systems which support knowledge-collection and -sharing.
Focus of engagement
In general, it will be easier for organisations whose engagement is focused at the community
rather than individual level to build a diverse funding portfolio as their work will be more
easily understood and appreciated by a wider range of funders and donors. For example, it is
relatively easier to attract funding from individual or corporate donors for a schools workshop
than for an artist development programme.
Start-ups/project funded and Service, Umbrella and Networking (SUN) organisations
There are two groups of organisation that will always struggle to establish an operating model
that is truly sustainable.
The first group are the very small, start-up, project-funded organisations. It is hard to see how
these organisations can become sustainable without additional organisational development
support. They often do not have the skills, the time or the money to invest in doing more than
delivering. As they are unlikely to generate returns at a commercial level, they cannot follow
the usual commercial routes of bank borrowing, venture capital or private equity.
The second group are agencies created by policy-makers and funders to plug gaps in the
market and support the wider ecology. Frequently, these organisations were created to
bridge a substantial gap between what funding bodies believed the sector needed to thrive
and what the market artists and arts organisations were willing and able to pay for.
Such organisations will often struggle to find multiple income streams and will remain
heavily dependent on public subsidy.
Snapshot 2008/2009
This section looks at the 188 members of the Arts Council visual arts regularly funded
organisation portfolio through the lens of the Henley Centre matrix. The financial data is
actual data for 2008/2009 from the organisations annual returns. The data is aggregated
at a high level and does not permit detailed analysis.
In total the organisations generated turnover of 131m, received Arts Council funding of
46m and other public funding of 26m.
The aggregate deficit for the year was 3.2m and total deficits were recorded for all three
years from 2007 to 2010. It is likely that some, if not most, of these deficits relate to the write
down of restricted fund assets, however, they still tell a story of weakening balance sheets
and a failure to set aside funds for asset maintenance.
Community +
knowledge
(cultural
producer)
No of organisations
Individual +
knowledge
(agency)
Individual +
fixed (studio)
Community +
fixed (gallery)
43
52
20
73
Total turnover
19m
21m
8m
84m
Average turnover
0.4m
0.4m
0.4m
1.1m
(|0.4m)
0.04m)
0.3m
3.1m
Total surplus/(deficit)
Figure 5, 2008/2009 Henley Matrix analysis, Towards Thriving 21st Century Organisations (Curry and Gunn,
2005, p8)
The portfolio covers a very wide range of organisations in terms of scale and business model.
The largest regularly funded organisation has a turnover of over 8m while the smallest has
less than 50,000. Thirty-seven organisations received over 1m in core Arts Council support
(66 per cent of the total) and core grants ranged from 2.8m to less than 40,000 per year.
The galleries clearly dominate the portfolio in financial terms. Most organisations are tiny in
financial terms, with 90 per cent meeting the EU definition of micro-businesses.2
The inherent fragility of micro-businesses is well documented in the commercial world and is a
key reason why publicly funded support is offered to their owners via Business Link, local
authority enterprise and regeneration teams, and so on.
2 A microenterprise is defined by the EU as an enterprise that employs fewer than 10 persons and whose annual turnover
and/or annual balance sheet total does not exceed 2 million (1.7m).
The following tables summarise the income and costs breakdown for the year.
Income 2008-2009
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
Agency
Earned
Cultural
ACE
Development
Gallery
Studio
Other public
Figure 6, Income 2008/2009
All of the sub-sectors are vulnerable to reductions in public funding; those most at risk are
the cultural producers who receive 2/3 of their funding from these sources compared with
1/3 for studios.
Costs 2008-2009
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
Agency
Cultural
Staff
Gallery
Studio
Other
Figure 7, Costs 2008/2009
The cost structures within the sub-sectors vary significantly. Staff costs make up a high
percentage of total costs 45 per cent of agency and similar organisations costs and 37
per cent for studios and cultural producers.
In summary:
Taken together, the regularly funded organisation portfolio looks weak financially
Most organisations are micro-businesses and face the challenges of being very small
and having very limited resources.
Staff costs represent a substantial proportion of total costs.
The portfolio is very fragmented with great variations in scale and business model.
Work on improving financial viability needs to take place at the sub-sectoral level with
similar organisations working together to take on common challenges.
How can visual arts organisations develop better

business models?
This section sets out a number of actions which visual arts organisations could take to
strengthen their business models; not all actions will be relevant or appropriate for all
organisations, some are potential quick wins, others are major cultural changes, which
would take several years to bear fruit. There needs to be a balance between actions
designed to
control costs
improve productivity (achieving the same result with less resources and/or achieving
more with the same resources)
income growth
The recommendations are broken down as follows:
audience focus
business skills development
smarter support operations
financial and funding strategies
Audience focus
Audiences (including potential collectors, volunteers and donors) are the most obvious
and currently under-exploited source of future resources and income; their development
should be a key component in the sustainability strategy of any organisation with a
community/public focus.
A number of projects and initiatives are now underway, which are exploring the potential
of this area.
Audiences London and London galleries project to develop a framework for standardised
audience data collection3 http://www.audienceslondon.org/2413/our-collaborativeprojects/audiences-for-the-visual-arts-stage-2.html
Turning Point SE and Audiences South pilot programme
3 Organisations involved are: Autograph, Barbican Art Gallery and The Curve, Beaconsfield, Camden Arts Centre, CGP
London, Chisenhale Gallery, Courtauld Gallery, Design Museum, Gasworks, Hayward Gallery, Iniva, Matts Gallery,
National Gallery, National Portrait Gallery, Photographers Gallery, Serpentine, The Showroom, South London Gallery,
Tate Britain and Tate Modern, V & A and Whitechapel Gallery
Contemporary Art Society collector development programmes in the North East and North
West http://www.contemporaryartsociety.org/become-a-member/north-east and http://
www.contemporaryartsociety.org/become-a-member/contemporary-art-society-north-west
Turning Point Easts work on collector development
Wysing Arts collector scheme http://wysingcollective.blogspot.com/
It is important that the network identifies mechanisms to share the learning from these
projects and that ways are found to invest further in this area.
Business skills development
The general level of business skills within the sector is low (Creative and Cultural Skills, 2009).
Too often, performance is not well managed, financial information is late and uninformative
and marketing is tactical and reactive. Scarce resources are wasted because people do not
know how to use them more effectively.
It is very hard for small organisations employing a few people to commit time and money to
training. Could the Turning Point Network help to bring organisations together to share training
either on a regional or sub sector basis? How could the online tools currently being developed
support this? Could mentoring schemes be developed with the support of individuals from
other art forms, other areas of the third sector or workers in the creative industries?
Other possible sources of support and learning include:
peer to peer learning
board members with business experience
Business Link
Creative and Cultural Skills4
business schools in higher education institutions
further education colleges
local enterprise partnerships (possibly)
Smarter support operations
In business, one of the rules of thumb is that you can take 10 per cent out of the cost base
of most businesses without significantly impacting on delivery but that beyond 10 per cent
you have a choice: you either do less or do things differently. All the organisations in the
4 CCS is in the process of developing a Creative Business Survival Toolkit, which will be available to download for free in
March/April 2011. The project is being supported by the MLA and the Crafts Council and is specifically targeted at sole
traders and micro-businesses.
network face cuts of over 10 per cent and few would wish to do less in terms of programme,
so the obvious solution is to rethink those operations that are not integral to the
organisations specific cultural offer.
There are five possible (not mutually exclusive) options; all should result in reduced costs and/
or a better service for the same money but would require careful planning and a willingness
to rethink and probably formalise existing processes.
joint procurement
outsourcing
shared services
redesigning your business processes
volunteering
Joint procurement
Joint procurement is simply defined as, combining the procurement (ie purchasing) actions
of two or more contracting organisations.
Commonly quoted advantages and challenges are:
Advantages
Challenges
Lower prices
Lower admin costs
Pooling skills and expertise
Upfront investment in establishing frameworks and agreeing needs

Need to compromise
Need to change existing processes eg planning
Table 4, Joint procurement
Outsourcing
Outsourcing is the transfer of a business function to an external service provider, who could
be a member of the Turning Point Network; in this case it would be an example of shared
services. Outsourcing is not the same as subcontracting: there is an ongoing relationship
between the parties rather than a one off deal transaction.
The practice originated in the private sector but is becoming more commonplace within the
public and third sectors. Examples within the arts world include:
outsourcing of payroll and book-keeping functions
use of freelancers
operation of some catering operations
the provision of administration services to resident companies by their hosts, for example,
Pilot at York Theatre Royal
the management of the newly opened Corby Cube by Northampton Theatres
HQ Theatres management of a number of civic venues
The advantages and challenges are usually summarised as follows:
Advantages
Challenges
Concentrate on core business

Cost and efficiency savings
Higher-quality service through better skills
and experience
More flexible cost structure
Upfront investment in agreeing contracts/service

level agreements
Need to rethink and probably formalise your
own processes
Risks around non-delivery need managing
Table 5, Outsourcing
Shared services
Shared services is the same as outsourcing, except that a group of like-minded organisations
come together to provide each other with services, or form a new entity to do so. The issues
are similar to outsourcing except that you are working with friends with all of the
advantages and possible disadvantages that such a relationship brings.
Shared services
ConsortiCo Ltdis a consortium of voluntary sector organisations. Bedford Creative Arts
is a founder member.
The aim of ConsortiCo is to harness the strength and flexibility of the voluntary sector to
deliver public sector contracts. It provides a single contracting route for commissioners,
while protecting the unique identity and contribution of the member organisations.
Member benefits include:
the ability to join a fast-growing family of like-minded voluntary organisations
the ability to participate in consortium bids for larger/more complex contracts
advice and support from the ConsortiCo hub
reduced isolation for chief officers
the ability to create shared services such as HR advice and IT puchasing
the ability to work in thematic partnerships to develop concepts to present
to commissioning bodies
www.consortico.com
The piloting of such an approach by one of the Turning Point groups, with a clear
remit to share the lessons and structures, would be a significant contribution to
enhancing sustainability.
Redesigning your business processes
There are two main reasons to review your operational processes periodically to see if they
can be improved:
over time business processes tend to become less efficient
the last ten years have seen a revolution in business support technologies (for example,
accounting, project management, customer relationship management) that are now
relatively inexpensive and easy to use with minimal training.
Shape introduced a new enterprise level accounting system (cost 10,000 including training)
that allowed it to produce management accounts promptly, funder reports automatically
and real-time financial information for all budget holders on their computer desktops.
Understanding, charting and redesigning business processes is time-consuming but not
overly challenging; it can yield real results by reducing activities that do not add value and
by improving performance.
Volunteering
Interns are an established feature of the operating models of many visual arts organisations.
Recently, in response to rising unemployment, particularly among the young as well as in the
light of ideas around the big society, there has been renewed debate around the ethics of
using volunteers and unpaid interns.
In December 2009 the TUC and Volunteering England agreed a joint charter incorporating the
following principles
All volunteering is undertaken by choice, and all individuals should have the right
to volunteer, or indeed not to volunteer.
While volunteers should not normally receive or expect financial rewards for their
activities, they should receive reasonable out of pocket expenses.
The involvement of volunteers should complement and supplement the work of
paid staff, and should not be used to displace paid staff or undercut their pay and
conditions of service.
The added value of volunteers should be highlighted as part of commissioning or grantmaking process but their involvement should not be used to reduce contract costs.
Effective structures should be put in place to support and develop volunteers and
the activities they undertake, and these should be fully considered and costed when
services are planned and developed.
Volunteers and paid staff should be provided with opportunities to contribute to the
development of volunteering policies and procedures.
Volunteers, like paid staff, should be able to carry out their duties in safe, secure
and healthy environments that are free from harassment, intimidation, bullying,
violence and discrimination.
All paid workers and volunteers should have access to appropriate training
and development.
There should be recognised machinery for the resolution of any problems between
organisations and volunteers or between paid staff and volunteers.
In the interests of harmonious relations between volunteers and paid staff, volunteers
should not be used to undertake the work of paid staff during industrial disputes.
See http://www.volunteering.org.uk
These principles, together with the detailed guidance offered by Volunteering England,
provide a framework for the employment of unpaid staff. It is not a no cost option good
volunteering schemes cost money to set up and run but it does offer real benefits. As well
as providing a way for organisations to reduce their fixed cost base while maintaining activity
levels, intelligent use of volunteers can enhance the impact that an organisation can have
within its community.
Financial and funding strategies

Fundraising and philanthropy
The coalition government has clearly signalled its wish to see arts organisations increase
their fundraised income and Arts Council England has recently released a policy paper
on philanthropy. With notable exceptions, such as The Serpentine Gallery, the visual arts
(especially outside London) has not done as well as some other art forms, such as music,
in this area.
This is a substantial topic and well beyond the reach of this short report. However, I would
suggest that the network considers commissioning some research:
comparing current fundraising performance across the network and exploring the reasons
for relative success and failure
assessing the potential for further fundraising
looking at pilot studies, possibly as action learning sets
Active reserves policy
Reserves are boring and receive very little attention. Many organisations have chosen to
budget for break even year after year and not to build reserves, believing that in the event
of a financial crisis:
they will be bailed out
funders will withdraw grants from organisations with too much money in the bank.
If either position was ever true, neither is true now.
Reserves are a fundamental component in a sound business model. Appropriate free reserve
levels (unrestricted reserves not invested in fixed assets) are essential to allow an organisation:
to respond strategically to changes in funding and the external environment without being
forced into slash and burn cost-cutting
to invest in opportunities and in long-term development, which cannot be easily or quickly
fundraised for
to take both programming and commercial risks and to reap the rewards
to manage cash-flow peaks and troughs
For a very useful summary of the issues, see the recent MMM report (Bolton and Cooper, 2010).
Reserves planning should be part of the business planning process for any organisation and
should tie directly into risk assessment. There are a number of sources of excellent advice
on reserves policies and risk management on the web including
Charity Commission CC19 Charities and reserves http://www.charitycommission.gov.uk/
publications/cc19.aspx
Charity Times http://www.charitytimes.com/pages/ct_features/august06/text_features/ct_
august06_feature4_balancing_the_equation.htm
Sayer Vincent, Drawing up a reserves policy http://www.sayervincent.co.uk
Improving secondary spend
Many galleries and other venues have a catering outlet and some have a shop; these
operations, together with hires, often constitute the main source of earned income.
Unfortunately, after allocating overheads, too many facilities do not make money.
Notable exceptions are Cornerhouse and BALTIC, which both have a:
great location
strong brand
do not try and run the business directly using either a franchisor or separate
trading company.
If you have a catering or retail operation that is not performing consider commissioning
a quick and dirty external review from an expert consultant.
Consider if your offer is appropriate many venues offer the kind of catering their senior
managers enjoy rather than the service that most of their visitors want. Do not confuse
issues about branding with personal likes and dislikes.
Be ruthless if it cannot make a profit because it is too small, there is too much local
competition or not enough footfall close it or at least contain the losses by passing the
risk onto an outside firm.
For guidance see http://www.ncass.org.uk/content/become_a_caterer.aspx
Overheads review
If your organisation occupies a sizeable building consider commissioning an overheads review
from a reputable cost management consultancy if one has not been undertaken in recent
years. Standard terms are: no upfront fees and 50 per cent of all savings achieved over threeyear period. The consultants, who use smart computer programmes and their connections
with utility suppliers, and so on, to compare prices and negotiate better deals, will undertake
the bulk of the work for you. Savings can be in the region of 2050 per cent.
In 2009, for example, Farnham Maltings instructed Auditel to undertake a review of its
overheads. Savings achieved were in the range of 13 per cent for gas and electricity, 23
per cent on merchant card fees and 60 per cent on alarms.
See http://auditel.co.uk/publish/testimonials/2010/06/30/farnham-maltings/#more-755
Concluding thoughts
During this research an interesting paradox emerged. There is a widespread belief, broadly
supported by the evidence, that business models in the visual arts are relatively weak and
vulnerable to relatively modest changes in public funding and the external environment.
Equally, there is a broad consensus around the necessary traits of a strong business model,
for example, those set out by the Arts Council Thrive programme and widely endorsed by
policy-makers, consultants and leaders in the sector:
a strong future vision, which is clearly articulated through mission and values
artistic excellence and the capacity to take artistic risks
a commitment to learning and development to enable the organisation to be flexible
and adaptable
financial viability (including positive balance sheets and a range of income streams)
sound managerial systems and human resource practices
good leadership and clear governance
a sound knowledge of present and future audiences, participants and customers
strong networks and good relationships with stakeholders, customers and suppliers
I have summarised these as the need for an arts business to have a strong and appropriate
organisational culture and to be well-led and well-managed so that it can be attractive,
agile and able to deliver.
Suggestions for further action
We know what success would look like; the challenge is to make it happen. Some of the
obstacles are systemic but there are many actions that individual organisations and the
network could take, which would make a significant difference to the health of individual
organisations and the sector as a whole. Building better business models is not rocket
science it is a combination of hard work, serious thinking, common sense, a focus on
the customer and being open to learning from each other, colleagues in other artforms,
the third sector and the private sector.
The following are offered as a friend not a critic!
Individual organisations
Understand your own business model (if you do not already) using one of the models
offered in this report. Think about your assets both tangible and intangible and how
you can best exploit them to attract money and other resources. Get real clarity about
what it costs you to deliver each aspect of your programme on a full cost-recovery basis.
Understand where you really add value and where things could be done better, possibly
by someone else.
Take a long hard look at your current reserves policy and the risks your organisation faces.
Be honest and set a policy target you will actually deliver and be prepared to live with the
consequences if you do not set aside enough.
Actively consider how you could collaborate at an operational level with other organisations
in your region/sector via joint procurement and/or shared services.
Identify those parts of your business that are generic and not fundamental to your unique
cultural offer, for example, book-keeping, payroll, IT. Consider whether you could outsource
these to an external provider or share services with other cultural organisations to save
money and/or get a better service for the same money.
Challenge yourselves to get to know your audiences better and work out how you
could generate more financial value from them, for example, more retail spend per
head, friends schemes.
If you have a commercial trading operation for example, a shop, a caf or room hire
does it make money after you have taken all the costs into account? If not, why are you
running it? What could you do to increase profitability grow revenues, improve margins,
change the product mix?
Work out how you could raise the business awareness and skills within your organisation.
Options include: learning from peers in other organisations, getting your board involved,
Business Link, local enterprise partnerships, your local business school and/or further
education college as well as training, knowledge transfer from consultants and bringing
new staff into the organisation.
Consider the introduction of a modern, well-thought out volunteering or intern programme
to reduce your fixed cost base.
If you run a building, consider an overhead review by a reputable cost management
consultancy. There should be no upfront fees and you share the savings with them,
typically 50:50 over a say three-year period.

Open up the debate about the relationship between the visual arts and business.
Use the knowledge-sharing tools being developed to highlight interesting ideas and
good practice about creative and arts businesses both in the UK and overseas.
Encourage pilot projects and share the resulting learning. Consider the developments
of toolkits, tips n tricks and good practice guides out of these pilots to be shared
across the network. Look at the third sector for good examples of how to do this,
such as National Council for Voluntary Organisations, Association of Chief Executives
of Voluntary Organisations, Association of Charitable Foundations.
I would suggest the following topics, some of which are already underway:
shared services
audience development
business skills development
individual and corporate giving outside London.
Funders particularly Arts Council England
Become less tolerant of underperformance and become more willing to pull the plug
on failing organisations and projects.
Require the use of the self-evaluation framework for all regularly funded organisations
and insist upon the production of proper threefive-year business plans.
Provide clear guidance on the importance of a proper reserves policy and strategy.
Place a greater emphasis on audience development within the visual arts.
Consider how the new funding framework could support the development of
shared services.
Explore with the sector and other players, for example, sector skills councils, and
NCVO, how the level of business skills could be raised within the sector.
Invite all recipients of Organisational Development funding to share their knowledge
within their sector and/or regionally.
Publish in an accessible form the key learning points from the OD Thrive programme.
Continue to support the network as a key mechanism in building strength within
a fragmented sector.
This concludes my report. It has been a most fascinating project whose timeliness has seemed
to grow with each passing week. The chance to reflect on some issues very close to my heart
has been a great gift and a privilege. I would like to thank Vivienne Bennett and the Turning
Point Network for commissioning the work and for all those who have, in so many generous
ways, assisted with its production.
Our sector is full of creative and exciting people making and presenting great work.
The changes we need to make are, I believe, fairly clear the challenge will be harnessing
our creativity and passion to make those changes so we can continue to deliver great work.
Appendix A: bibliography
Works cited
Arts Council England, The change works, Gfta OD Thrive! Materials, 2007 (unpublished)
Bolton M and Cooper C, with Antrobus C, Ludlow J and Tebbutt H, Capital Matters, Missions
Models Money, 2010
Bourdieu P, The production of belief: contribution to an economy of symbolic goods,
Media, Culture Society, 2, 261 - 293, 1980
Brookes M, Kail A, and Thomas J, Proving your worth to Whitehall, New Philanthropy
Capital, 2010
Collins J, Good to great and the social sectors, Random House, 2006
Curry A and Gunn D, Towards thriving 21st century organisatons, The Henley Centre, 2005
Drucker P F, The Effective Executive, Butterworth-Heinemann, 2007
Drucker P F, The Practice of Management, Butterworth-Heinemann, 1955
Heady L, Social return on investment, New Philanthropy Capital, 2010
Iansiti M and Levien R, The Keystone Advantage, Harvard Business School, 2004
Jackson A, Ideas on conceptualising resilience, Annabel Jackson Associates, 2010
Kaplan R S and D P Norton, Strategy Maps Harvard Business School, 2004
Kotter J, Leading Change, Harvard Business School, 1996
Leighton D and Wood C, Measuring Social Value, Demos, 2010
Megginson L C, Lessons from Europe for American Business, Southwestern Social Science
Quarterly 1963, Issue 44( vol.1) p3-13
Osterwalder A and Pigneur Y, Business Model Generation, John Wiiley and Sons, 2010
Robinson M, Making adaptive resilience real, Arts Council England, 2010
Schein, E, Organisational Culture and Leadership, Jossey-Bass, 2010
Works I found helpful
Many of these works and those above include useful bibliographies so I have sought to draw
attention to works not listed elsewhere.
Arts Council England, Achieving great art for everyone, Arts Council England 2010
Brinckerhoff P C, Generations, Fieldstone Alliance, 2007
Collins J, Good to Great, Random House, 2001
Curtis E C, Nelson S and Engel A F, Literature Review on Capitalization, Grantmakers in

the Arts, 2010 (download at http://www.giarts.org/article/national-capitalization-project)
Florida R, The Great Reset, HarperCollins, 2010
Hesmondhalgh D, The Cultural Industries, Sage, 2007
Howkins J, The Creative Economy, Penguin, 2007
Iansiti, M and Levin, R, (2002) The Keystone Advantage. Harvard Business Press
Kaplan R S and Norton D P, The Execution Premium, Harvard Business Press, 2008
Morris Hargreaves McIntyre, Taste Buds: how to cultivate the art market, Arts Council
England, 2004 (download at http://www.artscouncil.org.uk/publication_archive/taste-budshow-to-cultivate-the-art-market/)
Peters T, Re-imagine, Dorling Kindersley, 2003
Sharpe B, Economies of Life. International Futures Forum, 2010
Appendix B: contributors
Claire Antrobus
Independent consultant and Clore Fellow, Claire Antrobus Consulting
Vivienne Bennett
Director, Visual Arts Strategy, Arts Council England
Lynn Blackadder
Consultant, Lynn Blackadder Consultancy
Iwona Blazwick
Director, Whitechapel Gallery
Sarah Bolling
Interim Chief Executive, Audiences London
Kate Brindley
Director, Museums and Galleries, Middlesbrough Council
Andrew Brown
David Brownlee
Chief Executive, Audiences UK
Anna Dinnen
Manager, Organisational Development, Arts Council England
Alison Edbury
Chief Executive, &Co
Ken Elvy
Director, Organisational Development, Arts Council England
Caroline Felton
Chief Executive, Creative and Cultural Skills
Adrian Freidli
Director, Digital Projects, Arts Council England
Dawn Giles
Director, Bedford Creative Arts
Elizabeth Gilmore
Chris Grady
Consultant, Chris Grady.org
Rosy Greenlees
Chief Executive, Crafts Council
Hilary Gresty
Director, VAGA
Timandra Gustafson Arts Projects and Resources Manager (acting),
Hampshire County Council
John Hartley
Paul Hobson
Director, Contemporary Arts Society
Diane Howse
Co-director, PSL
Annabel Jackson
Consultant, Annabel Jackson Associates
Amanda King
Turning Point South East Co-ordinator
Dawn Langley
Consultant, Alchemy research and Consultancy
Donna Lynas
Director, Wysing Arts Centre
Sheila McGregor
Chief Executive, Axis
Val Millington
Director, National Federation of Artists Studio Pacavaroviders
Dave Moutrey
Chief Executive, Cornerhouse
Andrew Nairne
Executive Director, Arts Strategy, Arts Council England
Michael Noonan
Consultant
Taylor Nuttall
Ian Oakley-Smith
Victoria Pirie
David Pratley
Francis Runacres
Mark Segal
Paul Smith
Michelle Solarno
Mary Alice Stack
Pauline Tambling
Sally Taylor
Jon Treadway
Alessandro Vincentelli
Richard Watts
Simon Zimmerman
Director, folly
Director, PricewaterhouseCoopers
Chair, Walford Mills
Consultant, David Pratley Associates
Director, Investment, Arts Council England
Director, Artsway
Liverpool Biennale
Manager, Artco
Managing Director, National Skills Academy
Director, LCACE
Director of Regular Funding, Arts Council England
Curator, Baltic
Consultant, People make it work
National co-ordinator, Turning Point, Arts Council England
Appendix C: organisations reviewed
Acme Studios
Arnolfini
Artangel
Artsway
Aspex
Association for Cultural Advancement
through Visual Art
Beam
Bedford Creative Arts
Bluecoat
Bow Arts Trust
Bridge Street Arts
Camden Arts Centre
Centre for Creative Collaboration
Compton Verney
Cornerhouse
De La Warr
Derby Quad
Devon Guild
FACT
Forma
Four Corners
Future Everything
Grizedale
ICA
Ikon
Institute of Contemporary Arts
John Hansard
Knowle West Media Centre
Kube
Lakeland Arts
Liverpool Arts Regeneration Consortium
Milton Keynes Gallery

mima
Modern Art Oxford
Mother Studios Hackney
Museums Sheffield
Newlyn Art Gallery
Nottingham Contemporary
Pavilon
Photographers Gallery
Picture This
Plymouth Arts Centre
Project Art Works
Project Space Leeds
Serpentine
South London Gallery
Spike Island
the Architecture Foundation
The Culture Company
Watershed
Whitechapel
Workplace Gallery
Wysing Arts Centre
Yorkshire Arts Space
Yorkshire Sculpture Park
Appendix D: interesting and blogs
All these sites and blogs have prompted, informed and provoked my thinking on this area
(I have not included the obvious ones, such as The Guardian, Arts Council England)
http://www.matthewtaylorsblog.com
http://newphilanthropycapital.wordpress.com/#
http://thinkingpractice.blogspot.com/
http://www.internationalfuturesforum.com/iffblog/?p=606
http://www.audiencesuk.org/
http://www.urbanophile.com/
http://www.axisweb.org/Dialogue.aspx
http://museumtwo.blogspot.com
http://www.claireantrobus.com/blog/
Appendix E: The performing arts paradigm
During my research many of those I consulted commented that the prevailing arts funding
paradigm was that of the performing arts and that it was important to understand how
the performing and visual arts models differed.
The following summary comparison between a hypothetical regional producing theatre
and a typical regional gallery explores the key differences in business model and their
implications. Clearly, many of these comments will not apply to all visual arts organisations,
such as artist studios.
The absence of paying customers is the most significant difference. The business model
is less flexible both in terms of cost (proportionally higher fixed costs) and revenues
(fewer opportunities to boost revenue and profits through programming). In a gallery,
increased activity usually leads to an increasing need for subsidy. Audience numbers are
not a major component in balancing the budget and are therefore sometimes ignored,
thereby ignoring a critical source of new revenue. In the absence of a commercial income
stream to manage, business skills are not prioritised/developed within the staff team and
there is little investment in better business processes.
Within producing theatre there is a tradition of collaboration as a result of co-producing,
presenting etc. Typically, curators wish to curate their own shows not stage ones put
together by others.
Variations in customer behaviour make it harder to generate commercial revenue theatre
audiences purchase high-margin alcohol and merchandise over a restricted time-frame,
whereas gallery visitors buy a coffee during the day.
Lack of a well-established network of industry bodies which provide cohesion and
opportunities for shared learning/networking, such as the Theatrical Management
Association, Society of London Theatres, Equity, BECTU and The Independent
Theatre Council
In the absence of paying customers at the heart of the business, visual arts organisations
will always need to work relatively harder to build and maintain robust models.

14 Great Peter Street
London SW1P 3NQ
www.artscouncil.org.uk
Email: enquiries@artscouncil.org.uk
Phone: 0845 300 6200
Textphone: 020 7973 6564
Charity registration no 1036733
You can get this publication in Braille, in large print,

on audio CD and in electronic formats. Please contact us
if you need any of these formats.
To download this publication, or for the full list of Arts Council
England publications, see www.artscouncil.org.uk
ISBN: 978-0-7287-1499-1
Arts Council England, February 2011
We are committed to being open and accessible. We welcome
all comments on our work. Please send these to Alison Cole,
Executive Director, Advocacy & Communications, at the Arts
Council England address above.

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2 | Business models in the visual arts

Turning Point Network

What is a sustainable visual arts business model?

How good are the current models?

How can visual arts organisations develop better business models?

Appendix C: organisations reviewed

Appendix D: interesting and blogs

Appendix E: The performing arts paradigm

3 | Business models in the visual arts

Turning Point Network

4 | Business models in the visual arts

Turning Point Network

5 | Business models in the visual arts

Turning Point Network

6 | Business models in the visual arts

Turning Point Network

7 | Business models in the visual arts

Turning Point Network

The report addresses three key questions:

8 | Business models in the visual arts

Turning Point Network

What is a sustainable visual arts business model?

9 | Business models in the visual arts

Turning Point Network

LEARNING & GROWTH

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Turning Point Network

Figure 2, Business Model Generation (Osterwalder and Pigneur, 2010)

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Turning Point Network

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Turning Point Network

Why and when does having a good business model matter?

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Turning Point Network

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Turning Point Network

Making adaptive resilience real (2010)

Arts Council Organisational Development (OD)

A strong future vision which is clearly articulated

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Turning Point Network

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Turning Point Network

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Turning Point Network

The ability to deliver comes from:

Planning and budgeting

Table 2, Leadership and management compared, Leading Change (Kotter, 1996)

Or put very simply

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Turning Point Network

Efficiency is doing things right; effectiveness is doing the right things.

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Turning Point Network

How good are the current models?

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Turning Point Network

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Turning Point Network

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Turning Point Network

Activity and investment models

Cash in => activity out. Focus on programme

2 | Business models in the visual arts

What is a sustainable visual arts business model?

How good are the current models?

How can visual arts organisations develop better business models?

Appendix C: organisations reviewed

Appendix D: interesting and blogs

Appendix E: The performing arts paradigm

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